Day-trading over-confidence

Wednesday, 20th May 2009 14:07 - by Boredmum

I have found that I can be prone to over-confidence in my day trades. There are trades that I can buy and sell, and then be happy to leave well alone. Then there are trades that I buy, sell at a profit, go back in again and take a hit on them. I’ll give you an example of one share that I traded recently; Lipoxen (TIDM code: LPX). I purchased this and sold it, making a profit. The next day it was still on the rise so I went in again. This time, I sold quickly (within about 10 minutes) and I had made my second profit. The second time I had sold this was around the 24p price, it then proceeded to rise, and I’m sure the bid (sell price) hit 28p before it started to fall. It fell to around 22p, when I felt it had settled and it was time to go back in. Unfortunately, I didn’t get out promptly the third time. The share price dropped off and I should have taken a small loss and just got out. I’m afraid that I am still struggling with this ‘selling at a loss’ business! The price continued to drop and each time I thought “this has got to settle”, I should have listened to my instinct and sold. As I write, the share price is 13p, so now I’m thinking do I: a) Sell at a huge loss? b) Average-down? c) Confine it to my investments a while longer? An associate once told me “an investment is a day trade that has gone wrong”...I now know what he meant by this.